Lemonade launches insurance product for Tesla Full Self-Driving customers

Digital insurance company Lemonade is launching a product for users of Tesla’s advanced driver assistance system, known as Full Self-Driving (Supervised), which the insurer promises will reduce rates per mile by “approximately 50%.”

It’s one of the first products geared toward pricing insurance based on how software systems handle driving, and it’s a sign that the company could create new business as partial autonomy and automated driving begin to develop.

Lemonade said Wednesday it was using “previously unavailable vehicle telemetry data” because of “technical collaboration with Tesla,” though the insurer declined to provide more specifics. Lemonade says it will train a risk prediction model based on self-use to determine when drivers are using Full Self-Driving or operating their own vehicles, and at what cost.

Lemonade calls its new product “Autonomous Car Insurance.” Tesla’s software does not currently make the car autonomous, and drivers must be ready for it to take over at any moment. But the product is clearly a bet that Tesla CEO Elon Musk will finally fulfill his long-delayed promise that his company will make it happen.

“Traditional insurers treat Tesla like any other car, and AI like any other driver. But a driver who can see 360 ​​degrees, never falls asleep, and reacts in milliseconds like no other driver,” said Shai Wininger, founder and president of Lemonade, in a statement. “Existing pay-per-mile products offer what traditional insurers lack: a unique technology stack designed to collect vast amounts of driving data for accurate and dynamic pricing.”

The new auto insurance product will launch in Arizona on January 26, and in Oregon the following month. Lemonade asserts that “the more secure FSD software is, the lower the price.” The company’s existing auto insurance quotes are available for “most popular cars” in Arizona, California, Colorado, Illinois, Indiana, Ohio, Oregon, Tennessee, Texas, and Washington.

Tesla has offered its own car insurance to customers for years, although at the end of 2025 the company is subject to enforcement action by the California Department of Insurance (CDI). The automaker was accused, along with State National Insurance Company, of “excessive delays in responding to policyholder claims,” ​​”unreasonable denials,” and engaging in “unfair claims settlement practices.”

Tesla has denied the allegations.